Bitcoin price has formed a rare chart pattern that could push it significantly higher in the next few months, according to famed technical analyst Peter Brandt.
In an X post, Peter Brandt, a popular analyst with over 700,000 followers, noted that Bitcoin (BTC) had formed a bullish chart pattern. He pointed to the inverted right-angled broadening triangle, which was coined by Richard Schabacker in 1934.
The inverted right angled broadening triangle was coined by Richard W Schabacker in his 1934 book Technical Analysis and Stock Market Profits (se below)
— Peter Brandt (@PeterLBrandt) August 7, 2024
Also shown is the chart of Bitcoin $BTC
While the upper boundary is not horizontal, I still think the two match up well pic.twitter.com/T85WqDKotz
This pattern, often described as the falling broadening wedge, typically leads to a strong bullish breakout over time.
It occurs when an asset forms two descending trendlines as shown below. In this case, the upper side of the wedge was formed by connecting the highest points in March, May, June, and July. The lower side connected the lowest levels in those months.
This pattern has worked well before, with the most notable period being in the first quarter of 2020 as the Covid-19 pandemic started to spread at an alarming rate worldwide.
Additionally, Bitcoin has formed a hammer candlestick pattern, characterized by a long lower shadow and a small body.
For the right-angled broadening triangle to play out, Bitcoin needs to hold steady above the lower side of the hammer. A breakdown below that point will invalidate the pattern and lead to more downside.
Potential catalyst for Bitcoin
For the pattern to succeed, Bitcoin will need a major catalyst. Like in March 2020, this catalyst could come from the Federal Reserve.
In a recent note, Chicago Fed President Austan Goolsbee indicated that the Fed would ‘fix it’ if the economy spirals into a recession. Fixing it would involve interest rate cuts and potentially, quantitative easing.
There are signs that a recession might occur. On Aug. 6, crypto.news reported the Sahm Rule, which looks at the jobless rate. In a note, The Kobeisi Letter noted that the unemployment rate had risen for four straight months. A recession has always occurred every time this pattern has formed in the past 75 years.
— The Kobeissi Letter (@KobeissiLetter) August 7, 2024This is concerning:
The US unemployment rate has risen for 4 consecutive months, the longest streak since the 2008 Financial Crisis.
Over the last 75 years, every time unemployment rose for 4 consecutive months, the US economy entered recession.
The jobless rate has surged… pic.twitter.com/7P4Ghkwk3i